Could there be a problem running the 8700G on Cingular. Should I install Cingular's version of 4.0?

No -- the carrier OS is really irrelevant. In fact, I'm running TMO's 4.1.0.284 on my 8700c with Cingular.

If there's a coverage issue sometimes the BB won't recover even when it regains signal unless the wireless state is cycled (have you tried that)? Resending the service books and pulling the battery are also standard troubleshooting that you might want to try if you haven't already.